SASKATOON — Biofuel promoters are feeling simultaneously vindicated and frustrated by new numbers released by the U.S. Environmental Protection Agency.
Those numbers show U.S. biomass-based diesel production, which includes biodiesel, renewable diesel, sustainable aviation fuel (SAF) and heating oil, reached four billion gallons in 2023.
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That is much more production than the EPA was counting on last June when it announced its final Renewable Fuel Standards (RFS) for 2023, 2024 and 2025.
The RFS called for 2.82 billion gallons in 2023, 3.04 billion in 2024 and 3.35 billion gallons in 2025.
The 2023 mandate was a mere 60-million-gallon increase over 2022 levels, but the actual amount produced was more than one billion gallons higher.
“The clean fuels industry achieved what EPA said could not be done,” said Kurt Kovarik, vice-president of federal affairs for Clean Fuels Alliance America.
The industry warned the EPA that its mandate was far too low and sent the wrong signal to those planning to build renewable diesel plants and oilseed crushing facilities.
They see the 2023 production number as proof that the EPA woefully underestimated the potential of the sector.
“EPA’s data demonstrates that the rapid, sustainable growth we projected is being achieved,” said Kovarik.
Fortunately, federal policies are not the only demand driver. State policies are equally important.
“You’ve also got corporate boardroom mandates and policies pushing decarbonization,” he said.
Kovarik said it’s a three-legged stool, but one of those legs has been cut off, creating a wobbly situation for U.S. biofuel facilities and the soybean and canola crush plants providing the feedstock.
The U.S. soybean industry had been set to expand by 35 percent, generating US$6 billion in economic activity.
“All of that in my mind is certainly at risk with this low RVO (renewable fuel obligation),” he said.
Some of that proposed biofuel and crush capacity might not get built and some existing plants could close their doors.
He highly doubts the EPA will revisit the 2024 and 2025 mandates. In fact, the agency is supposed to be finalizing new mandates for 2026 and perhaps beyond by the end of this year.
Kovarik isn’t holding his breath that the EPA will meet that timeline because 2024 is an election year and biofuel is a polarizing political issue.
“They have no interest in kicking a hornet’s nest on one side or the other,” he said.
The 2026 mandate will largely depend on what party controls the White House.
He thought the Democrats would have been biofuel friendly due to climate change being their top priority, but they appear to have chosen to promote electric cars over biofuel.
Kovarik thinks that is short-sighted because it will be a long time before the air, rail and commercial trucking sectors are electrified.
The United States isn’t the only big market for biofuel.
Global biofuel demand is expected to reach 200 billion litres by 2028, a 23 percent increase over 2023 levels, according to a new report by the International Energy Agency (IEA).
Renewable diesel and ethanol are expected to account for two-thirds of that growth, with biodiesel and SAF making up the remainder.
Brazil, Indonesia and India will generate most of the new demand.
“All three countries have robust biofuel policies, rising transport fuel demand and abundant feedstock potential,” stated the IEA report.
The European Union, the U.S., Canada and Japan are also strengthening their biofuel policies.
But growth in those developed markets will be constrained by rising electric vehicle adoption, vehicle efficiency improvements, high biofuel costs and technical limitations.
Biofuel will account for 60 percent of the reduction in annual oil consumption by 2028, with electric vehicles making up the remainder, said the IEA.
SAF use will expand by nearly five billion litres by 2028, making up one percent of global jet fuel supplies by that time.
“The United States, Europe and Japan are at the forefront of this growth, propelled by strong policy support,” said the IEA.
Contact sean.pratt@producer.com
